Why was my bonus taxed at the 40% rate when I am a basic-rate taxpayer?

David Wesley-Yates
27 March 2018


I earn £27,500 a year and recently received a £1,000 bonus. However, when I received my payslip, I only got paid £590 of the bonus with the rest taken in tax. Given I’m a basicrate taxpayer, why was I taxed so much? Will I receive a tax rebate at the end of the year, assuming my earnings don’t hit the 40% higher tax rate?



There are several reasons why you may have paid too much tax on your bonus. These range from your employer using the wrong tax code to your income falling part way through the tax year.

At the end of every tax year, HM Revenue and Customs (HMRC) will review details of all your income and the tax you have paid during the tax year. If you have underpaid or overpaid, HMRC will send you a P800 Tax Calculation form, showing how it has calculated the overpayment or underpayment.

You must always check your P800 tax calculation carefully, as HMRC may not have all the information it needs to calculate your tax correctly, or it may have inaccurate information. If you don’t agree with it, contact HMRC and follow the instructions provided with the form.

If you have overpaid tax, a refund will be sent to you. You do not have to claim it. However, the system can prove to be unreliable at times and a phone call to HMRC after the end of the tax year on 5 April 2018 should sort it out.   

David Wesley-Yates is a chartered tax adviser at Red & Black AccountancyFind out who our experts are on the Ask the Experts homepage.